Thursday, March 15, 2012
Freight management is a current hot spot within the logistics industry. Often time businesses have a disadvantage when looking into ways to reduce freight costs. They think in the box to often looking at the obvious cost saving techniques. Individuals working within a company have a hard time separating themselves to look at what is and has always been in order to find new and unique ways to change and in turn reduce costs.
This is the exact reason supply chain, logistic consulting companies are hired. When an outside consultant is able to look at the current freight management of a company they see everything for what it is at the point of analysis. This makes it easier for them to determine areas that are proficient and those that are not. Consultants take the not so obvious and suggest putting actions into place within small parcel, ground parcel and international post freight management that will improve service, customer satisfaction and reduce freight costs.
The obvious way to decrease freight costs is by seeking a lower shipping rate with carriers. This is often an area where businesses are lead to believe they are already receiving steep discounts and the room for negotiation is zero. This however is often not the case. Many carriers will lead customers to believe that their steep discount of say 75% is the highest they give anyone. While this may be the case it is important to realize that their lowest price is not always the industry’s lowest price. Carrier A may think their 75% discount is incredible but when Carrier B is offering the same service without any discount at all at a lower price that is obviously not the best deal you can be negotiating. Negotiate with Carrier B for a discount on their already lower price is the answer to cost savings in this situation.
Important FreightManagement Money Saving Tips
1) Discounts verse Actual Rates: As proven in the above situation a discount is not always leading a client to the lowest actual rate. Even if a carrier is offering a steep discount look to see how overly inflated the original shipping rate is. It is important to determine a firm’s typical shipment fees rather than their discount. A typical fee schedule lower than other carriers discounted fees shows how jaded discounts or percentages off can really be. It is not a deal to buy a twenty-five dollar crate at a 50% discount form Carrier A when the same crate and service from Carrier B is originally only ten dollars.
2) Fuel Surcharges: This is another area in which companies often get handed extra fees. Many firms think that fuel surcharges are fixed at a certain rate. This is not something that should be assumed. Unless it is written in your agreement with a shipper the freight fuel surcharge they are charging your company could be double what could have been negotiated. This is often an area where a lot of money can be saved.
3) Behind The Scene Daily Operations: When looking at the employee expense involved with freight transportation management you will need to look at the amount of time that is spent daily receiving and reviewing shippers quotes. Even if the company is receiving a smaller number of quotes per shipment and the average shipment per week are ten that are sixty quotes that need to be looked at and evaluated.
If each quotes analysis takes ten minutes you are looking at six hundred minutes or ten hours each week that the transportation manager is tied up reviewing quotes. With the technology that logistic consultants are able to implement now-a-days that time can be decreased substantially. Web based logistic software will help decrease the time spent over the tedious tasks and increase the time spent on money making operations within the firm.
Software implementation helps in other arenas within freight transportation management such as the review and auditing of freight bills. Inaccurate billing leads to lost revenue within the freight division of a firm. It is pertinent that software be implemented to check for inaccuracies within the auditing process to save.
4) Parcel Management: When hiring a freight management consulting firm they will audit the current back end process thoroughly. They will then implement a plan that will work within the organization to minimize time spent handling damage claims, lost shipments, reconciled claims, shipment schedules and paperwork prep. Minimizing the time spent on these aspects with the use of tools and technology specifically designed for the individual operations will increase the profitability of your supply chain. They do this by decreasing human processing errors and employee time wasted finding the problems that need resolved. When the technology finds an error than it is up to the employees to seek out solutions that cannot be handled through the software.
Friday, February 10, 2012
What does it take to be successful in business? Everyone’s answer to that question will vary a great deal. In my opinion it requires tremendous aptitude and intellectual tools to help increase competency and execution. An increase in proficiency will help to ensure customer satisfaction by a systems that guarantees on time delivery of the products and services they need most. Businesses can only create a working environment that succeeds in doing this by implementing a solid logistic system creating fluid supply chain management.
In order to have a solid logistic management approach many businesses must start by completing a supple chain audit. When a consultant comes in to any business they are looking at the procedures in place with fresh eyes and are able to view things differently than employees close to the situation. This is helpful to businesses that are stuck in the rut of doing things they way they have always done them. In a supply chain audit solutions are given that accommodate the changes in technology, business environment, and the routes in which goods travel. Without the ability to change and coordinate in line with the most efficient combination of distribution methods it is impossible to compete in business.
Not every consultant that claims to be proficient in logistic and supply chain management is an expert. In order to be a complete success the consultant and firm your business chooses needs to have expertise to see through a plan without negatively affecting business. The suggestions and solutions they offer must integrate new technology without completely forgoing elements that are currently working well. They must offer solutions that are cost effective and increase distribution speeds to the outlying markets.
Many pieces to the logistic puzzle must work together to achieve harmony in mode optimization for your companies logistic team. Deciding on vendors to use will determine who is in line with the company’s main goal of saving money and decreasing lag time between shipping and receiving. Contractual documents need to be managed, rates and pricing changes need to be constantly evaluated and kept up, payments, and any discrepancies must be tracked to ensure no key piece is left without management.
A reliable consultant will help put in place, or over see, the running of the entire supply chain system. A structure that will allow for long term success will have several key components. A reliable solution will offer service that is secure, easily tracked and able to be maneuvered to make room for faster distribution options.
Taking steps towards a more efficient running supply chain is a step in the right direction for success in business. This will allow your company to make profitable gains in service as well as improving the entire distribution process. Making changes and regular auditing to the supply chain will ensure long term growth and profitability to your company. It will be amazing to see the differences in the way a firm competes in the market place with a few well placed tweaks to systems in place. Often times the only way to see these issues is to hire a consultant or a firm to evaluate the current runnings of systems in place. The money spent on the consultant will be well spent in profits returned.
Friday, January 20, 2012
Business is all about making money unless of course it is a non-profit set out to free the world of injustice. One thing all business owners for profit or not have in common is that they are always on the lookout for cutting costs. This is truer now than ever before with the constant shifts in our economic culture. Business’s are no longer frivolous when it comes to who is offering services to them and at what costs. It is no longer a given that business owners will stick with old suppliers if new suppliers offer the same services at lower rates. More businesses turn to consultants to keep their businesses running efficiently.
One business affected by the economic down turn is the shipping industry. The competition is increasingly high to deliver high speed delivery at reasonable costs locally, nationally and globally. This in turn affects industries relying on these services for shipment of their products and for their product shipments. Logistic services firms are called in to do a complete supply chain audit for companies. With this a company can improve their receiving and distribution expenses and maintain or improve upon existing quality.
A supply chain audit starts by doing a freight analysis. This is done to determine where the business stands as of the moment the logistic service team walks in. Later on this will help provide a starting point to measure future results. The analysis will look into two major areas that can increase costs substantially which are the actual freight costs and fuel surcharges.
It is important that a supply chain audit is thorough. Logistic service firms will audit and evaluate shipment lanes, shipment volumes and discounts, rate and class categories, fuels surcharges and current pricing arrangements. It is important for the logistic team to get information on where the business is in comparison to industry averages to see how much room is open to negotiate better terms for their client. There are several tools that are used as benchmarks within the supply chain industry such as; air freight, small parcel, ground freight, international/global freight transportation, truckloads, ocean, rail, canal, warehousing or a combination of services.
A supply chain audit provides a logistic team with the information it needs to optimize logistic services within the company. The next step after knowing where issues exist, after negotiations and answers are given is to implement the plan and make the necessary change to the businesses logistic division to maximize mode optimization.
Implementation of the various levels of supply chain audit can be done with either help from the logistic consultants or without. That will be dependent upon each individual company. If choosing to implement the changes within the company without help from the logistic service consultants it is wise to at least allow them to reevaluate the changes a few months down the road to make sure everything is working as it should be and that all areas that needed addressing have been and are implemented as desired.